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Assume that EarthScience's patent expires. GeoSci, a company with the capability to produce the same technology as EarthScience, intends to enter the market and charge
Assume that EarthScience's patent expires. GeoSci, a company with the capability to produce the same technology as EarthScience, intends to enter the market and charge a lower price than EarthScience for the technology. EarthScience is considering whether to maintain its price or to lower its price to match GeoSci's price. GeoSci is considering whether or not to advertise its entry into the market. The matrix below shows the payoffs for each combination of strategies, and both players (EarthScience and GeoSci) have complete information. The first entry in each cell represents EarthScience's payoff and the second entry represents GeoSci's payoff. Each player independently and simultaneously chooses its strategy. Use the matrix provided below to answer parts (f)-(h). GeoSci Advertise Not Advertise Maintain Price $520,$460 $400, $250 EarthScience Lower Price $450. $350 $320. $650 f) Does EarthScience have a dominant strategy? Explain using numbers from the payoff matrix. g) Identify the Nash equilibrium, Explain why this is a Nash equilibrium using information from the payoff matrix. h) Suppose GeoSci makes a credible commitment to EarthScience that if EarthScience lowers its price, then GeoSci will pay EarthScience $150. Will this offer result in a Nash
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